Oracle Cloud Weakness Results In Analyst Downgrades

ORCL stock is trading just above its dot-com-era highs

Mar 20, 2018 at 10:33 AM
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Oracle Corporation (NYSE:ORCL) is pacing for its third straight quarter of post-earnings losses, with the shares falling 9.3% this morning to trade at $47.15. While the tech giant's sales from its cloud business rose almost 32% during its fiscal third quarter to $1.57 billion, this number fell just shy of estimates. Meanwhile, Oracle's earnings per share beat expectations on an adjusted basis, and its current-quarter forecast was better than expected. Still, analysts are weighing in bearishly on ORCL stock.

Most notably, Stifel downgraded the shares to "hold" from "buy," while KeyBanc slashed its rating to "sector weight" from "overweight." On the other hand, Morgan Stanley maintained its "overweight" opinion from the start of the year, citing strong margins, tax reform, and the company's stock buybacks. This positive outlook is actually the norm, with 20 of the 28 brokerage firms tracking ORCL saying it's a "buy" or "strong buy."

The stock hasn't had much success on the charts since its June bull gap, however. It's chopped sideways since then, topping out at familiar resistance near $53 earlier this month. But the $46-$47 area has contained all pullbacks, including when ORCL took a strong bounce off its 320-day moving average last month.

For what it's worth, the $45 level is home to the stock's dot-com-era highs, and options traders today seem to be betting this will continue to mark a floor for the shares. Data gives the impression of sell-to-open activity at the April 45 put today, which is by far the most popular contract. More than 23,000 of the puts have already crossed, with open interest at the strike only standing at around 2,000 contracts coming into today.

 

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